In a bid to create jobs and promote entrepreneurship, the Cabinet on Wednesday approved Rs 8,000-crore funds that will stand guarantee for loans to new ventures and also announced ‘Stand up India’ scheme for credit facilities to SC, ST and women entrepreneurs at lower rates.

While the Rs 3,000 crore MUDRA Credit Guarantee Fund (CGF) will act as hedge against default of Rs 50,000 to Rs 10 lakh loan extended to small entrepreneurs, the Rs 5,000 crore Stand Up India CGF will stand guarantee for Rs 10 lakh to Rs 1 crore loans to be provided to least 2.5 lakh SC/ST and women.

The Cabinet, headed by Prime Minister Narendra Modi, has cleared creation of a Credit Guarantee Fund for MUDRA loans, Finance Minister Arun Jaitley told reporters in New Delhi. It also gave its nod to convert MUDRA Ltd, a pet venture of the Centre for funding small businesses, into MUDRA-SIDBI Bank, a wholly owned subsidiary of Small Industries Development Bank of India (SIDBI).

The government had last year set up MUDRA Ltd as a non- banking finance company (NBFC). Under the ‘Stand Up India’ scheme, Jaitley said banks will give loans at the “least applicable rate” of interest. “Every bank branch, including private sector, will give loans between Rs 10 lakh and 1 crore to at least one SC/ST and one woman entrepreneur under the scheme,” he said.

Stand Up India scheme, which is likely to be launched along with Start up India scheme on January 16, will be implemented through 1.25 lakh bank branches. Launched in April 2015, MUDRA scheme has already extended loans worth Rs 72,000 crore to 1.73 lakh beneficiaries and the target for the entire fiscal is Rs 1.22 lakh crore.

Financial Services Secretary Anjuly Chib Duggal said the National Credit Guarantee Trustee Company Ltd (NCGTC) would be the Trustee for both the CGFs of MUDRA as well as Stand Up India.